KUALA LUMPUR (May 22): CIMB Group Holdings Bhd reported a 57.39% decline in first-quarter (1Q) net profit due to lower non-interest income (NOII) and higher provisions across selected markets.

In a filing today, the banking group said net profit for the quarter ended March 31, 2020 (1QFY20) dropped to RM507.93 million or 5.12 sen per share from RM1.19 billion or 12.46 sen per share a year earlier.

This is the group's lowest net profit since 1QFY15, when it posted RM580.12 million.

CIMB said revenue fell marginally to RM4.14 billion, from RM4.17 billion in 1QFY19.

The group expects credit loss on loans, advances and financing to jump by 222.15% to RM967.59 million, from RM300.01 million in 1QFY19.

Credit losses for commitments and contingencies were estimated at RM51.67 million against RM25.08 million previously.

The group said net NOII came in lower at RM778.00 million, from RM979.92 million in 1QFY19, due to weaker trading and forex income from markets adversely impacted by Covid-19 at the tail end of the quarter.

Operating expenses rose by 0.7% year-on-year (y-o-y), the group said, adding the cost-to-income ratio rose to 56% from 55.3% due to the weaker income during the quarter.

Net interest income (NII) increased by 4.8% to RM2.57 billion from RM2.46 billion.

Gross loans during the quarter grew 3.8% y-o-y, while total deposits rose 3.9% on the back of stronger showings in Singapore and Thailand.

CIMB said its current account-savings account ratio strengthened to 36.5%, while its loan-to-deposit ratio stood at 91.2% (from 91.4% in 1QFY19).

Meanwhile, its gross impairment ratio was 3.4% with an allowance coverage of 75.9%.

CIMB's consumer banking pre-tax profit fell 8.5% to RM528 million despite operating income rising by 8.1% on a wave of stronger NII and NOII. Cost for the segment came in 1.2% higher, but this was offset by higher provisions.

The commercial banking segment saw 4% growth in operating income and 0.7% decline in operating expenses. But the segment's pre-tax profit was impacted by greater provisions.

In the case of its wholesale banking division, the pre-tax profit fell 84.7% to RM74 million on the back of weaker capital markets in March. NOII for the segment declined 64.8% but was offset by the 10.2% growth in NII.

In a separate statement, CIMB said its profitability was impacted by volatile trading conditions, lower forex income and isolated credits, which gave rise to greater provisioning in selected markets.

"The first quarter was a challenging one and we foresee continued challenges for the rest of the year.

"Despite this, we are confident that the banking system is far more resilient today, given the lessons learnt from previous crises, and the reforms put in place as a result," it added.

This, the group said, includes a better-capitalised banking sector with sufficient buffers to be able to withstand the negative shocks of Covid-19.

"Extraordinary times demand extraordinary measures and as a good corporate citizen, we are focussed on easing the financial burdens of our customers and communities. We continue to work with the government and regulators to ensure financial support is provided to customers during this crucial period.

"At the same time, we are accelerating certain plans, which include digital initiatives and processes, to provide a more seamless and convenient banking environment for customers in the new normal going forward," said CIMB.

The group expressed confidence that these measures, alongside its well-established franchise and strong Common Equity Tier 1 capital base of 12.5%, will ensure "the group's agility and ultimately, its long-term resilience in the face of the crisis".

CIMB shares finished 2.53% or nine sen lower at RM3.47 today, valuing the group at RM34.43 billion.